Title
Dept/ Agency: Economic and Housing Development
Action: ( ) Ratifying (X) Authorizing ( ) Amending
Type of Service: Contract with Sub-recipient
Purpose: Authorizing the Execution of a Sub-Recipient Agreement between the City of Newark and Newark Community Economic Development Corporation for the Administration of the HUD Section 108 Loan Guarantee Program
Entity Name: Newark Community Economic Development Corporation
Entity Address: 111 Mulberry Street, Newark, New Jersey 07102
Grant Amount: $12,000,000.00
Funding Source: Section 108 Loan Guarantee Program
Contract Period: Terminates upon satisfaction of loans
Contract Basis: ( ) Bid ( ) State Vendor ( ) Prof. Ser. ( ) EUS
( ) Fair & Open ( ) No Reportable Contributions ( ) RFP ( ) RFQ
( ) Private Sale ( ) Grant (X) Sub-recipient ( ) n/a
Additional Information:
Funds accepted by Resolution 7R1-j adopted on September 18, 2013.
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WHEREAS, the United States Department of Housing and Urban Development (“HUD”) has designated the City of Newark, State of New Jersey (“City”), as an Urban Entitlement Area under the Community Development Block Grant Program; and
WHEREAS, the City has been receiving Community Development Block Grant (“CDBG”) program funds since the inception of the program in 1974; and
WHEREAS, HUD administers the Section 108 Loan Guarantee Program (“Section 108”), which provides communities with a source of financing for economic development, housing rehabilitation, public facilities, and other physical development projects, including improvements to increase their resilience against natural disasters; and
WHEREAS, Section 108 offers state and local governments the ability to transform a small portion of their CDBG funds into federally guaranteed loans large enough to pursue physical and economic revitalization projects capable of revitalizing entire neighborhoods; and
WHEREAS, in its 2013-2014 Annual Action Plan submitted to the United States Department of Housing and Urban Development (“HUD”) and authorized by Resolution 7R1-j, adopted September 18, 2013 by the Municipal Council of the City of Newark, the City applied for a Section 108 Loan Pool allocation and identified Newark Community Economic Development Corporation (“NCEDC”) (under its former name as Brick City Development Corporation) as the intended sub-recipient of the City for the administration of the Section 108 Loan Pool; and
WHEREAS, NCEDC was formed for the purpose of the receipt and administration of funds for charitable purposes and the performance of activities pertaining to economic development within the City, including development of residential, commercial, industrial, and other real estate in a manner beneficial to the City, all as more specifically set forth in NCEDC’s Certificate of Incorporation; and
WHEREAS, HUD, by letter dated July 29, 2013, approved the Section 108 Loan Guarantee Assistance Program Application in the amount of $12,000,000.00 (the “Section 108 Loan Funds”), and has approved subsequent extension requests made by the City; and
WHEREAS, the City anticipates entering into multiple Contracts for Loan Guarantee Assistance under Section 108 of the Housing and Community Development Act of 1974 as amended, 42 U.S.C. §5308 ("Section 108 Loan Agreements") for the purpose of obtaining Guaranteed Loan Funds in furtherance of the following activities:
(i) Housing rehabilitation, pursuant to 24 CFR §570.703(h) and §570.202; and
(ii) Special economic development activities, pursuant to 24 CPR §570.703(i) and §570.203; and
WHEREAS, the City has received approval from HUD for certain projects to be financed by the Section 108 funds which are designed to further said activities (the “Projects”); and
WHEREAS, in accordance with 24 CFR §570.503, the City may designate and enter into an agreement with a Sub-Recipient for the purposes of administering the Section 108 Loan Funds; and
WHEREAS, the City wishes to delegate the administration of the Section 108 Loan Funds to NCEDC in furtherance of the activities described above, as more fully set forth in the document entitled “Sub-Recipient Agreement Between the City of Newark and Newark Community Economic Development Corporation for the Administration of the Section 108 Guarantee Loan Fund Program” (the “Agreement”), which is annexed hereto as Exhibit ‘A’; and
WHEREAS, the Agreement contemplates that NCEDC will undertake the following activities in furtherance the administration of the Section 108 Loan Funds:
(a) NCEDC may, by written agreement, act as a redeveloper on behalf of the City on certain Projects, subject to HUD approval;
(b) NCEDC will administer and service loans made to other entities by the City from the Section 108 Loan Funds for certain Projects approved by HUD;
(c) NCEDC will be responsible to market, advertise, and promote the Projects on behalf of the City;
(d) NCEDC will maintain adequate documentation to demonstrate compliance with all applicable federal, state, and local laws; and
WHEREAS, the Agreement provides that NCEDC will receive a fee of up to 1% per month of the Section 108 Loan Fund Balance for marketing costs; and
WHEREAS, NCEDC will receive annual servicing fees of up to 2% of each loan for the servicing of loans, which fees shall be paid by the borrower; and
WHEREAS, the Agreement further provides that NCEDC will assume the City’s obligations to HUD as set forth in 24 CFR 570.502 and 24 CFR 570.503, including the preparation and maintenance of all reports and records required by HUD for the administration of the Section 108 Loan Funds.
NOW, THEREFORE, BE IT RESOLVED BY THE MUNICIPAL COUNCIL OF THE CITY OF NEWARK, NEW JERSEY, THAT:
1. The Mayor and/or his designee, the Deputy Mayor/Director of the Department of Economic and Housing Development, are hereby authorized to enter into and execute the Sub-Recipient Agreement between the City of Newark and Newark Community Economic Development Corporation for the Administration of the Section 108 Guarantee Loan Fund Program in the amount of $12,000,000.00.
2. No funds are needed for the execution of this Agreement.
3. The Deputy Mayor/Director of the Department of Economic and Housing Development shall file an executed copy of said contract with the Office of the City Clerk.
STATEMENT
This Resolution authorizes the Mayor and/or his designee, the Deputy Mayor/Director of the Department of Economic and Housing Development, to enter into and execute a Sub-Recipient Agreement between the City of Newark and Newark Community Economic Development Corporation for the Administration of the Section 108 Guarantee Loan Fund Program in the amount of $12,000,000.00.